Our recent study has demonstrated that iodide (I-) can be easily and almost entirely oxidized to hypoiodous acid (HOI) but not to iodate by nonradical activation of peroxydisulfate (PDS) in the presence of a commercial carbon nanotube (CNT). In this work, the oxidation kinetics of phenolic compounds by the PDS/CNT system in the presence of I- were examined and potential formation of iodinated aromatic products was explored. Experimental results suggested that I- enhanced the transformation of six selected substituted phenols, primarily attributed to the generation of HOI that was considerably reactive toward these phenolic compounds. More significant enhancement was obtained at higher I- concentrations or lower pH values, while the change of PDS or CNT dosages exhibited a slight impact on the enhancing effect of I-. Product analyses with liquid chromatography tandem mass spectrometry clearly revealed the production of iodinated aromatic products when p-hydroxybenzoic acid (p-HBA, a model phenol) was treated by the PDS/CNT/I- system in both synthetic and real waters. Their formation pathways probably involved the substitution of HOI on aromatic ring of p-HBA, as well as the generation of iodinated p-HBA phenoxyl radicals and subsequent coupling of these radicals. Given the considerable toxicity and harmful effects of these iodinated aromatic products, particular attention should be paid when the novel PDS/CNT oxidation technology is applied for treatment of phenolic contaminants in iodide-containing waters.